SBA 7(a) Coffee Shop Feasibility Study in Maryland

Small cafes, one dominant lender

Maryland's coffee shops and snack bars account for 107 SBA 7(a) loans and $27.4 million in gross dollars from FY2017 to FY2026. Maryland stands 24th among states for the pairing, and coffee is the 9 of 39 class at home. Loans are small: a median of $197,000, 0.88x the national figure, with the central loans from $50,000 to $363,200. Franchise brands appear on 49.5% of loans, nearly half. For a lender, this is an equipment and leasehold-improvement book more than a property one.

Manufacturers and Traders Trust Company holds 41 loans, many times the 5 held by each of three banks that follow: The Huntington National Bank, Newtek Bank and Fulton Bank. SBA's holder records reflect who has the paper now, not a bank's terms. Baltimore City leads the counties with 18 loans, Anne Arundel has 17, and Baltimore County, Howard and Prince Georges each have 13. Montgomery shows 10, Frederick and Harford 5 each. Approvals were thin in the early years, then reached 18 loans in FY2023 and 20 loans and $6.4 million in FY2026.

Floors

Cancellation took at least 9.7% of FY2017 to FY2024 approvals, or up to 12.5% counting undisbursed loans. For the funded cohort of 34 loans, the charged-off floor is 0.00% to date and inside five years. With only 34 loans in the cohort, one new charge-off would move the rate visibly, and any open loan could still produce one. None of the loss measures stood apart from Maryland as a whole or from coffee shops nationally.

What a Maryland cafe study must prove

Foot traffic is the central test: commuter flows, nearby offices, universities and residential density, set against the number of competing cafes and chains within a short walk. The study should build daily transactions, average ticket, cost of goods, labor and rent, and show how long a new shop takes to reach break-even. Lease terms and landlord build-out contributions affect the loan request. Debt service coverage needs a slow ramp and a weak-summer or weak-winter case. If a franchise is involved, royalties and required equipment must be in the model. An appraisal of a small cafe rests on documented earnings, so the study should show how the first year of sales will be evidenced for the lender, and how seasonal swings in foot traffic will be absorbed without missing a payment.